FEDERAL COURT OF AUSTRALIA Arrow Pharmaceuticals Limited v Merck & Co., Inc. [2005] FCA 188 ARROW PHARMACEUTICALS LIMITED v MERCK & CO., INC. NSD 1211 OF 2002 GYLES J 9 MARCH 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1211 OF 2002 BETWEEN: ARROW PHARMACEUTICALS LIMITED APPLICANT AND: MERCK & CO., INC. RESPONDENT JUDGE: GYLES J DATE OF ORDER: 9 MARCH 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1 Subject to order 2 the respondent pay the applicant's costs of the proceedings. 2 The applicant pay the respondent's costs: (a) arising out of service of the affidavits of John Anthony Eden, Thomas John Martin, Michael Jeffrey Hooper and Martin Epstein and the provision of related patient records; (b) of and incidental to the issues raised by paragraphs 8, 9, 10 and 11 of the Fourth Further Amended Particulars of Invalidity. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1211 OF 2002 BETWEEN: ARROW PHARMACEUTICALS LIMITED APPLICANT AND: MERCK & CO., INC. RESPONDENT JUDGE: GYLES J DATE: 9 MARCH 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Orders were made in this matter on 8 October last. Those orders followed the delivery of reasons on 6 October 2004 (Arrow Pharmaceuticals Limited v Merck & Co., Inc. [2004] FCA 1282). The issue of costs was stood over for further argument. In the course of the reasons for judgment I said: 'As to costs, my present view is that Merck should pay Arrow's costs of the proceeding, excluding costs relating to particulars of invalidity on the ground of novelty which were not pursued at trial.' Broadly speaking, the applicant is content with that result. The respondent argues for apportionment of costs between particular issues. 2 The parties have proposed competing orders for costs which are respectively: The applicant: 'The Respondent pay the Applicant's costs of the proceedings, excluding costs relating solely to particulars of invalidity on the ground of novelty which were: (a) not pursued at trial; and (b) not relevant to the validity of claims of the Patent which were abandoned by the Respondent in making the amendments referred to in: (i) order 1 of the orders of 8 October 2004; or (ii) the orders of 25 February 2004 Such costs are to be taxed if not agreed by the parties.' The respondent: '(a) The Respondent pay the Applicant's costs of the issues finally determined against the Respondent in these proceedings or relating solely to the validity of claims of the Patent which were abandoned by the Respondent in making the amendments referred to in order 1 of the orders of 8 October 2004. (b) The Applicant pay the Respondent's costs of the issues finally determined against the Applicant in these proceedings or relating solely to the issues raised by the Applicant but not pursued at trial. (c) Costs of the issues not yet decided by the Court be reserved. Such costs are to be taxed if not agreed between the parties.' 3 I need not set out the issues in the case, which have been dealt with in the reasons for judgment, nor the detail of the submissions of the parties. I have been referred to a number of relevant authorities. 4 The applicant sought revocation of the patent over the opposition of the respondent and has succeeded. Subject to special factors it is entitled to the general costs of the action. The respondent has defended an invalid patent. The failure of the applicant to succeed on all issues is not sufficient to displace that principle. Furthermore, I agree with the applicant's submission that the mere abandonment of particulars of invalidity does not necessarily carry with it any costs consequences. The refinement of issues by abandonment of some is a necessary feature of this kind of litigation and will often have beneficial consequences for the conduct of the case. I do not agree that any special order is required in relation to the issue of lack of inventive step which was not decided. However, there are two aspects of the matter that require special consideration. 5 The first relates to the matter identified in the reasons for judgment, namely the abandonment of certain of the particulars of invalidity on the ground of lack of novelty concerning the actions of certain Australian practitioners. The applicant filed and served ten affidavits from four deponents which were not read at the trial. In addition, patient records relating to the deponents were to be relied upon at trial but were not. Those affidavits and patient records required special analysis and investigation on the part of the respondent for the purposes of both cross-examination and answer. In principle, the respondent is entitled to its costs of and incidental to work done in relation to or arising out of the service of those affidavits and patient records. 6 The second is the failure of the applicant to establish the ground of lack of entitlement and a related ground of false suggestion. I agree with the submission for the respondent that these grounds raised distinct factual issues necessitating separate preparation and hearing time. There may well have been some overlap with other issues but that will have to be assessed on taxation. In my view the respondent is entitled to payment of its costs of those issues. 7 The costs of this argument will be costs in the proceeding. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 9 March 2005 Counsel for the Applicant: SCG Burley Solicitor for the Applicant: Baker & McKenzie Counsel for the Respondent: KJ Howard Solicitor for the Respondent: Cropper Parkhill Date of Hearing: 16 February 2005 Date of Judgment: 9 March 2005